The Federal Communications Commission has banned the use of funds from its $8.5B Universal Service Fund to buy telecommunications products from Chinese companies Huawei and ZTE over concerns that they pose threats to U.S. national security.
FCC said Friday it adopted a new rule that would require telecom carriers that use the fund to remove Huawei and ZTE equipment and services, particularly 5G, from their networks and replace them with materials from acceptable companies.
The agency also proposed to create a reimbursement program to help companies cover replacement and removal costs.
Officials said that due to Huawei and ZTE’s close ties and legal obligations to the Chinese government, their products may have backdoors to allow foreign actors to inject malware, steal private data from U.S. citizens or spy on American companies.
FCC Chairman Ajit Pai said the agency initially designate Huawei and ZTE as covered companies for purposes of the new rule, with plans to establish a process for designating additional companies in the future.
Pai added that the adoption of the new rule highlights FCC's "commitment to doing everything we can within our statutory authority to address national security threats to our communications networks."